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Mr. Rendel: I think the hon. Gentleman has entirely misunderstood my point. I was saying that it is already true that the contributions do not give people a definite pay-out afterwards; I was not saying that it should be true that they do. That in itself proves that the national insurance contributions that we pay now are already, in effect, more of a tax than an insurance premium.
There is another reason why part I is particularly worth supporting. It involves exactly the opposite argument to the one advanced by the right hon. Member for Birkenhead (Mr. Field). It is welcome that people in our communities should recognise the fact that national insurance is already a form of tax. We are misleading them. It is a con trick to pretend to people that, by paying national insurance contributions, they are not, in practice, being taxed.
I entirely agree that, if we con enough of the people enough of the time, it may be slightly easier to raise money out of them and then spend it in ways that we feel
are appropriate, but that is not an entirely honest way in which to do things. It is important that we in this place should be open, honest and properly accountable for what we do, and that we do not try to mislead people into thinking that they are paying something which, actually, they are not paying.
Mr. Field:
I am amazed by the hon. Gentleman's argument. He rightly gives such emphasis to the Liberal Democrats' involvement locally to reflect what people think. I am not advocating that we have a national policy of deceit. All I am asking is whether it is not a useful starting point that most people regard national insurance as different from taxation. Given the resistance to financing the policies that the hon. Gentleman's party would like to have and that the Government wish to continue to promote during the current Parliament, what is the point of trying to knock the fact into people's head and say, "How foolish of you to think of national insurance as a contribution towards your benefits; it is, in fact, merely a tax"?
There is a major difference in people's minds. Taxation is that huge area of money that they lose and over which they do not have a direct say, whereas, with national insurance contributions, for all the worries that we have about Government actions on cutting benefits, people still feel that, in the main, they are well served by that fund.
Mr. Rendel:
I should not for one moment accuse the right hon. Gentleman of seeking to deceive people. I suggest that he is saying that people have been deceived, and that we should allow them to remain deceived. I believe, conversely, that we should ensure that people are no longer deceived but realise the truth of the situation--that, in practice, the two things are very similar.
Mr. Cousins:
Will the hon. Gentleman deal with the point made both by me and by my right hon. Friend the Member for Birkenhead (Mr. Field), and clarify whether the Liberal Democrats' policy is to do away entirely with the contributory principle? Is it their policy to do away with the national insurance fund? Is it their policy to do away with the actuarial defence of the national insurance fund?
Mr. Rendel:
The national insurance fund has, regardless, occasionally to be topped up by taxation: contributions alone do not fund the system. The defence of national insurance contributions being offered--that they are a form of insurance--has, therefore, long been discredited. Whether Liberal Democrats are in favour of that defence is irrelevant, as it is not available. It is only reasonable, decent and honest to admit that fact and to tell people what has happened.
Mr. Cousins:
Will the hon. Gentleman give way?
Mr. Rendel:
No; I have already given way quite enough in this debate.
The Tories' reasoned amendment suggests two reasons why the Bill should not be given a Second Reading. The first is that the Bill would
If the House wished, at some later date, to end the contributory principle, we should have a fair and reasoned debate on whether it would be right to do so. Although there might be differences between the three main parties about whether it would be right to end the principle, we should--for the reasons that have been given, some of which I have enumerated--address the issue at that point, and not erect artificial barriers today by failing to give the Bill a Second Reading.
It was unreasonable for the hon. Member for Chingford and Woodford Green to say that it did not matter that the previous Government were largely responsible for ending any pretence that national insurance contributions are a form of insurance. Every year they were in office, they did so much to destroy the contributory principle and to increase reliance on means testing.
The second part of the Tories' reasoned amendment mentions the "practical difficulties" of transferring functions. The hon. Member for Chingford and Woodford Green was, of course, right in saying that the national insurance recording system 2 has been a disaster, and that it gives us a severe warning about the difficulties of relying on major high-tech projects to deal with some of the problems of government. He was right also in that the Government have been forced to acknowledge the difficulties of NIRS2.
I should like, nevertheless, to congratulate the Government on making no fewer than two U-turns in the past couple of weeks--as I am not one for thinking that making U-turns is a sign of weakness. I am delighted that the Government had the good sense to realise that they made a mistake and consequently to make a U-turn.
The Government's first U-turn was made a couple of weeks ago, after the debate on the contributions uprating, when Ministers were under pressure for refusing to give compensation to the very poorest of those who had been affected by NIRS2. Only a few days later, during the debate on Third Reading in the other place, the Government decided to announce that they would, after all, make a U-turn and provide £10 compensation for all those who had been affected by NIRS2. The U-turn was very welcome, and I congratulate the Government on it.
In the past few days, the Government made another U-turn, on the matter of widows who were asked, under NIRS2, to decide between a widows pension and a retirement pension. In answer to a written question that I tabled to Ministers, we have learnt that widows who were misled by NIRS2 and were unable to choose correctly--so that they might gain the maximum benefit--will be allowed to choose again, after NIRS2 has given them the right information. I congratulate the Government on that U-turn also.
Liberal Democrats support the Bill. As other hon. Members have already said, the provisions in part I have long been Liberal Democrat policy. I understand that part II was based largely on a suggestion made in the other
place by Lord Goodhart, in last year's debate on the Social Security Act 1998. We therefore welcome part II also. Part III deals primarily with a technical matter.
Mr. Jim Cousins (Newcastle upon Tyne, Central):
I suppose that I have to declare a sort of interest, as I am one of the hon. Members representing the city of Newcastle, where the Contributions Agency is headquartered. I suppose that I also have a small claim to fame--you will understand, Mr. Deputy Speaker, that any small claim to fame in the House is one that should certainly be pressed--in that the national insurance recording system computer is headquartered in my constituency. However, I should add that, fortunately--as you will also understand, Mr. Deputy Speaker--one represents people, not computer systems.
I support the Bill. However, if there had been any indication that its passage would lead to a major loss of employment in my own city, I should of course not be supporting it. If it proposed any major loss of the administrative functions currently performed by the Contributions Agency, I should not be supporting it. If the Bill posed any threat to the contributory principle--as outlined by the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) and my right hon. Friend the Member for Birkenhead (Mr. Field)--I should not be supporting it.
I firmly believe that it cannot be right for the United Kingdom to have such a multiplicity of revenue collection services, and that it must be right to bring together the major revenue collection services. Amalgamation of the Contributions Agency with the Inland Revenue is long overdue, and I hope that that amalgamation will eventually be followed by amalgamation of Customs and Excise with the Inland Revenue. It cannot be right to have parallel revenue collection systems, which are extremely expensive to mount, all duplicating one another's work and imposing a burden both on taxpayers and on those with whom they have to deal.
It cannot be right to continue parallel revenue collection services especially now that we have been given an example of computer systems development and failure. That failure demonstrates the need for administrative unification of the administration services and information technology that supports revenue collection services.
I seek some assurance from Ministers on information technology. I believe that we should proceed as rapidly as we can in achieving unification of the information technology underpinning revenue collection, contributions and benefits. I hope that the Government are fully committed to eventual unification of the computer systems and data networks of the Contributions Agency, the Benefits Agency and the Inland Revenue; to full implementation of the intentions of the national insurance recording system project; to unification of housing benefit with the Benefits Agency; and, ultimately, to bringing the information handling of all those benefit distribution and revenue collection services into one system.
There are practical issues for Newcastle. As my hon. Friend the Minister knows, there is a major private finance initiative project called Prime, begun under the previous
Government, which will rationalise the Newcastle sites of the Benefits Agency and the Contributions Agency. I should like an assurance that the project will go ahead in its existing form. Only recently a Newcastle estates partnership was formed, to be run by the Contributions Agency, to take forward the management of the PFI estate project on behalf of the Department of Social Security. Where will responsibility for the project lie when the Contributions Agency is transferred to the Inland Revenue? I should like clarification on where the administrative drive and accountability for the Newcastle estates partnership are to be. Is that to remain with the DSS, whose PFI project it is, or will the responsibility for driving that forward to be transferred with the Contributions Agency to the Inland Revenue? Those are important housekeeping issues for the city of Newcastle. I hope that my hon. Friend will be able to clarify them.
I should like to make a plea for a small group of manual workers caught by one consequence of the merger of the Contributions Agency and the Inland Revenue. The Inland Revenue has a policy of not employing people over 60. The Contributions Agency allows people to work after 60 if they can still make a proper contribution to the service. A very small number of workers are caught not knowing what their employment prospects are. I hope that my hon. Friend the Minister will allow the current employment practices of the Contributions Agency to be extended for that small group, many of whom are low-paid manual workers performing routine functions such as security and portering. They should be able to continue their work without their prospects being affected by the administrative change of functions. I hope that the Minister will assure us that the prospects of casual and short-time employees of the Contributions Agency will not be varied because of the transfer to the Inland Revenue.
"facilitate the ending of the contributory principle".
Although I suppose that they are right to say that, the Bill certainly would not necessitate ending the principle, and it would be wrong for us not to pass the Bill only to raise an artificial barrier to ending the principle.
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